Behind the Rise of All-Inclusive Travel in the Americas

This is an excerpt from our free Skift Trend Report, The Evolution of the All-Inclusive Resort, brought to you in partnership with Club Med.
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A variety of travel industry and world economic disruptions over the last 15 years have helped drive the exponential success of the all- inclusive resort industry in the Americas and beyond, each of which helped produce a larger and more varied customer base.

When airlines began cutting their standard 10% commissions to travel agents in the late 1990s, the all-inclusive hotel companies continued to pay 10-12% commissions on their full package price, just like the cruise lines. At that time, all-inclusive companies began ramping up their marketing efforts toward agents promoting this fact, and agents quickly began shifting their attention to selling all-inclusive vacations for the more lucrative payouts.

Around the turn of the century, all-inclusive resorts catered mostly to European, Canadian and Latin American budget travelers. Seeing the rise of interest from the American market, the all-inclusive companies began catering more to the U.S. traveler. They introduced familiar U.S. food and beverage brands, more U.S. television channels, and in-room amenities demanded by American travelers such as coffee makers and irons/ironing boards.

Americans also tend to prefer larger guest rooms and poolside relaxation, whereas Europeans and Latin American are traditionally drawn to the beach. So hotel companies began to expand the size of their guest rooms, and they constructed lavish, multiple lagoon-pool layouts with large pool bars and poolside programming.

Over the ensuing years, the U.S grew into a primary source market for all-inclusive resorts in the Americas. The all-in-one pricing model and the inclusivity of integrated amenities within a secure environment also tapped into the needs for many travelers new to international travel. That was fueled by extremely low air/land travel packaging, in part due to the dramatic rise of the Dominican Re- public all-inclusive market at the time, and robust hotel expansion in the Bahamas, Jamaica and Mexico’s east coast through the mid- 2000s.

As more resort product opened and improved in overall quality, the all-inclusive sector also surged in global travel media exposure over the following years, while continuing to earn a better reputation among the American traveling public. The value of all this new media exposure as a marketing vehicle was significant.

Another major impact on the evolution of the all-inclusive industry, the global economic crisis beginning in the fall of 2008 accelerated bookings from a wider, more affluent audience. Suddenly, luxury travelers were looking for package travel bargains. A new influx of high-end consumers willing to try all-inclusive resorts for the first time spurred higher and higher levels of luxury product development and resort services based on heightened guest expectations.

Today, the all-inclusive resort industry in the Americas is now a fully mature hospitality vertical, targeting clearly delineated market segments including single and multi-generational families, couples of all ages, and luxury buyers. In fact, the model is so successful, it’s severely hampered large resort development outside the all-inclusive segment in Caribbean and Mexico beach destinations.

The future of the industry for the major hotel suppliers will revolve around more nuanced evolutions in the overall quality of the guest experience. Expect to see a rise in upscale family-centric resorts, more luxury and wellness resorts and services, and a continued push for more locally authentic cultural experiences.

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